A cynical commentary about developments in the South African financial markets and the incomprehensible activities and pronouncements of bureaucrats and politicians.

Friday, 12 September 2014

THE HEART OF THE MATTER

Perhaps it does not feel like it, but for
the past three months the JSE All Share index has trundled along inside a
trading range of just 2000 points. This represents a variation of not even 4%
of the average level of about 51 000. The JSE has been one of the most docile
and pedestrian share markets on the planet. Of course no one knows when or in which
direction the breakout will occur and it is unhelpful to state that the event
is always getting closer. It is more than 5 years since this index recorded a
double digit percentage monthly move. This was in July 2009 when a 10.1% gain occurred.
Similar massive gains were also enjoyed in March and May of that year when the
market was rebounding from the shock of the credit crunch.

Of course overall indices like this can
conceal considerable pain or joy in individual sectors and shares within the
market. Owners of mining shares – particularly platinums - have probably
suffered the biggest erosion of value in this period. The news that AngloGold
is rearranging its affairs has raised uncertainty levels as well. But because
these days these companies have a much reduced weighting in the overall picture,
their downward impact is easily matched in the calculation of the composite
index by much more modest moves elsewhere. By the way, who really believes the
AngloGold claim that SA political developments were not a factor in the
decision to split the company?

Company results this week were largely
rather good but there are still warnings being made that borrowers are not
servicing loans as diligently as expected. The earnings of most workers are still
too low to meet their aspirations and expectations. This is of course
exacerbated by the examples being set by those who demonstrate that dishonesty
and deceit are reasonable routes to influence and affluence. Under these
pressures saving and providing for the future has scant relevance. Reportedly
for example, teachers are resigning in scores in order to access pension
savings. We may not have seen the last of the terrifying collapses.

The SABC is calling for proposals for the
implementation of “an integrated internal control framework”. Presumably this
is autobabble for something that managers should be doing as the main part of
their job, but the national broadcaster wants outsiders to come and do it for
them. Is this not perfect evidence that the obscenely overpaid, unqualified
dodgy chief operating officer is incapable and should go? The problem is that
his boss, the chair of the corporation has now also been found out to have lied
about her qualifications and so also is not fit for purpose. It really is time
that we all boycott the paying of TV licences and press for the privatisation
of that sorry mess. It’s a tactic that definitely attracts the government’s
attention as the e-toll saga demonstrates.

Perhaps one of the most alarming stories
of the week is that the nation’s citrus industry has stopped exporting their
produce to Europe. Apparently this avoids the
probability of actually being served a permanent ban by the importers because
some of the fruit is carrying a harmless but unacceptable black spot blemish.
Clearly the industry has a huge problem on their hands and this is one occasion
when an informed government intervention might help. However, in the meantime
perhaps we could learn to drink Vodka and orange as presumably we must all do
our bit and consume the unsold fruit.

The three rugby teams that I wanted to
win last weekend all failed. The GP result was disappointing – can someone please
develop an engine to beat Mercedes - and even the Bafana result was
unimpressive. The cricket was great however, although the victory is being
tarnished by numerous articles that point out that sport’s declining support in
Australia.